The International Monetary Fund reaches a preliminary deal with Argentina on a $20 billion bailout

Argentina's President Javier Milei arrives to speak before President-elect Donald Trump during an America First Policy Institute gala at his Mar-a-Lago estate, Nov. 14, 2024, in Palm Beach, Fla. (AP Photo/Alex Brandon, File)

BUENOS AIRES, Argentina — The International Monetary Fund on Tuesday said it has reached a preliminary, staff-level agreement with cash-strapped Argentina on a US$20 billion bailout, providing a welcome reprieve to libertarian President Javier Milei as he seeks to overturn the country’s old economic order.

As a staff-level agreement, the rescue package still requires final approval from the IMF’s executive board, which was expected to meet in the coming days.

The fund’s announcement offers a lifeline to President Milei, who has cut inflation and stabilized Argentina’s economy with a free-market austerity agenda that has reversed the reckless borrowing of his left-wing populist predecessors.

The IMF has praised Milei’s success in slashing Argentina’s fiscal deficit but had held off on a new loan to the country that is its biggest debtor, with 22 IMF loans already handed out since 1958.

To achieve Argentina’s first fiscal surplus in almost two decades, Milei has eliminated government agencies, firing thousands of public employees and scrapping subsidies and price controls. But without cash from the international lender, he has been unable to rebuild Argentina’s rapidly depleting foreign exchange reserves, which he needs to repay debts and lift the country’s long-standing strict currency controls.

Currency controls prevent companies from sending profits abroad, discouraging foreign investment.

“The agreement builds on the authorities’ impressive early progress in stabilizing the economy,” the IMF said in a statement announcing the agreement on the loan under a 48-month arrangement.

There was no immediate response from Argentine authorities, who had been negotiating the deal for months.